- Canada’s GDP grew by 0.5% in January 2023, with both goods-producing and services-producing sectors showing growth.
- Seventeen out of twenty industrial sectors posted increases, with the mining, quarrying, oil, and gas extraction, manufacturing, and finance and insurance sectors contributing to the gains.
- A rebound in several industries that had experienced declines in December helped drive the gain, including wholesale trade, transportation and warehousing, mining, quarrying, and oil and gas extraction.
Editor’s Notes: In this report, we have used data from the Statistics Canada website.
Canada’s GDP grew by 0.5% in January 2023 after contracting by 0.1% in December 2022, according to data released by Statistics Canada. In the same period, the goods-producing and services-producing sectors also grew by 0.4% and 0.6%, respectively. Seventeen out of twenty industrial sectors posted increases.
The mining, quarrying, oil and gas extraction, manufacturing, and finance and insurance sectors contributed to the gains in February, but this was slightly offset by the construction, wholesale trade, and accommodation and food services sectors. This report provides an overview of the performance of various sectors in the GDP of Canada in January 2023.
Rebounds in Several Industries Drive the Gain in GDP
Many of the sectors that drove growth in January also contributed to the decline recorded in December 2022. In January, the wholesale trade, transportation and warehousing, and mining, quarrying, and oil and gas extraction sectors all rebounded from their previous month’s decline. After remaining relatively flat in the second half of 2022, the accommodation and food services sector was also among the top contributors to growth in GDP in January, led by food services and drinking places.
Wholesale Activity Rebounds in January
Wholesale trade rose 1.8% in January, offsetting the declines observed in the previous two months. Machinery, equipment, and supplies wholesalers, particularly construction and industrial equipment, drove the increase in GDP in January. Imports of industrial machinery, equipment, and parts rose, coinciding with strong imports of machinery and parts for the new liquefied natural gas terminal being constructed in British Columbia. Seven of the nine subsectors posted gains.
Mining, Quarrying, and Oil and Gas Extraction Rebounds
The mining, quarrying, and oil and gas extraction sector expanded 1.1% in January after stepping back 3.3% in December 2022 due to unplanned maintenance. The oil and gas extraction sector rose by 1.1%, led by oil sands extraction (+1.8%), while oil and gas extraction (except oil sands) was essentially unchanged in January. The mining and quarrying (excluding oil and gas extraction) sector rose 1.0% in January, led by a sharp increase in coal mining (+22.5%) as exports, particularly to China, rose.
Manufacturing Activity Rises
The manufacturing sector grew by 0.5% in January, with durable goods manufacturing driving the growth which increases GDP. Durable goods manufacturing grew by 1.2% in January, up for a third consecutive month. Machinery, miscellaneous, fabricated metal, and transportation equipment manufacturing drove the increase in the month. Motor vehicle manufacturing (+20.0%) posted the largest increase within the manufacturing sector. Non-durable goods manufacturing contracted 0.3% in January, with chemical manufacturing (-6.3%) leading to the decrease.
Construction Expands
In January, the construction sector posted its largest gain since March 2022, reflecting increases in all construction subsectors which increase the GDP. Engineering and other construction activities continued their long-term ascent and were the main driver of growth in the sector. Residential building construction rose for the second time in 10 months as home alterations and improvements drove the gain in January.
Non-residential building construction posted a second consecutive increase as industrial building construction and alterations and improvement expanded. Repair construction expanded for the first time in four months due to gains in both residential and non-residential repairs.
Transportation and Warehousing Rebounds Following Adverse Weather in December
Transportation and warehousing rebounded 1.9% in January, more than offsetting a 1.1% decrease in December, and transportation and warehousing rebounded 1.9% in January. This was more than enough to compensate for the adverse weather conditions in the previous month, which resulted in a decline in transportation and warehousing.
The rail transportation subsector contributed the most to the January increase, with its largest growth rate since May 2014. Carloadings of several major commodities, including coal, iron ore, fertilizers, and passenger vehicles, all increased in January 2023. Meanwhile, a rebound in domestic air travel in January contributed to a 0.2% increase in the air transportation subsector, following December’s decline.
The accommodation and food services sector expands significantly
The accommodation and food services sector rose 4.0% in January, marking a substantial increase in real GDP. Increased activity in the food services and drinking places subsector contributed significantly to the growth in the sector.
All types of food service activities saw an increase, with special food services (+6.7%) and limited-service restaurants (+4.9%) showing the most growth. After rebounding from the effects of the Omicron variant in December, the accommodation subsector also contributed positively to the sector’s growth in January, rising 0.4%.
| Industry | Change in January 2023 |
|---|---|
| Canadian Economy | 0.5% |
| Goods-Producing Sectors | 0.4% |
| Services-Producing Sectors | 0.6% |
| Mining, Quarrying, Oil and Gas Extraction | 1.1% |
| Manufacturing | 0.5% |
| Construction | N/A |
| Wholesale Trade | 1.8% |
| Transportation and Warehousing | 1.9% |
| Accommodation and Food Services | 4.0% |
| Finance and Insurance | N/A |
Note: N/A indicates that data is not available.
Conclusion
Overall, the Canadian economy saw a 0.5% increase in real GDP in January 2023, driven by growth in both the goods-producing and services-producing industries. A rebound in several industries that had experienced declines in December helped drive the gain, including wholesale trade, transportation and warehousing, mining, quarrying, and oil and gas extraction.
The manufacturing sector also grew, as did the construction sector, which posted its largest gain since March 2022. On the other hand, decreases in construction, wholesale trade, and accommodation and food services slightly offset gains in February. While some industries still face challenges due to the ongoing COVID-19 pandemic, the Canadian economy continues to show resilience and growth in several key sectors.
